• TABLE OF CONTENTS
HIDE
 Front Cover
 Abstract
 Acknowledgement
 Table of Contents
 List of Tables
 List of Figures
 Main
 Reference














Title: Growers' returns and marketing costs at each stage of the vertical marketing system for citrus
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
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Permanent Link: http://ufdc.ufl.edu/UF00026473/00001
 Material Information
Title: Growers' returns and marketing costs at each stage of the vertical marketing system for citrus
Series Title: Economic information report
Physical Description: v, 36 p. : ill. ; 28 cm.
Language: English
Creator: Tilley, Daniel S
Kilmer, Richard L
Publisher: Food and Resource Economics Dept., Agricultural Experiment Stations, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1979
 Subjects
Subject: Citrus fruit industry -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 34-36.
Statement of Responsibility: Daniel S. Tilley, Richard L. Kilmer.
 Record Information
Bibliographic ID: UF00026473
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000412675
oclc - 05741797
notis - ACF9674

Table of Contents
    Front Cover
        Front Cover
    Abstract
        Page i
    Acknowledgement
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
        Page iv
    List of Figures
        Page v
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
    Reference
        Page 34
        Page 35
        Page 36
Full Text




Daniel S. Tilley



Richard L. Kilm


Grow


Marketing


of the


Economic Information


Report 112





..N,



ers' Returns and j


I Costs at Each Stage


VerticalI Marketing
r a : .


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Food and Resource Economics Department A .
Agricultural Experiment Stations ,
Institute of Food and Agricultural Sciences April 1979
University of Florida, Gainesville 32611. .
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ABSTRACT


Changes in costs associated with each level in the fresh and

processed citrus marketing channel are examined. The results indicate

that nearly 60 percent of the retail food dollar spent on fresh grape-
fruit is associated with activities that occur after the fruit leaves
fresh fruit packinghouses. For frozen concentrated orange juice and
canned single-strength grapefruit juice the FOB-retail margin was

estimated to be 30 and 26.5 percent, respectively, of the consumers'

expenditures.


Key words: citrus marketing, marketing margins, cost trends,
citrus acreage, citrus production, on-tree revenue, on-tree returns.


ACKNOWLEDGMENTS


We wish to express our appreciation to Ms. Vera Anderson, Ms.

Sarah Miller, and Ms. Molly Owen for their clerical and secretarial
assistance.
















ABSTRACT


Changes in costs associated with each level in the fresh and

processed citrus marketing channel are examined. The results indicate

that nearly 60 percent of the retail food dollar spent on fresh grape-
fruit is associated with activities that occur after the fruit leaves
fresh fruit packinghouses. For frozen concentrated orange juice and
canned single-strength grapefruit juice the FOB-retail margin was

estimated to be 30 and 26.5 percent, respectively, of the consumers'

expenditures.


Key words: citrus marketing, marketing margins, cost trends,
citrus acreage, citrus production, on-tree revenue, on-tree returns.


ACKNOWLEDGMENTS


We wish to express our appreciation to Ms. Vera Anderson, Ms.

Sarah Miller, and Ms. Molly Owen for their clerical and secretarial
assistance.




















TABLE OF CONTENTS


ABSTRACT . . . . .


ACKNOWLEDGMENTS . . . .


TABLE OF CONTENTS . . .


LIST OF TABLES . . . .


LIST OF FIGURES . . . .


INTRODUCTION . . . .


TRENDS IN PRODUCTION, VALUE OF PRODUCTION,


HARVESTING AND HAULING COSTS . .


FRESH PACKING AND SELLING COSTS . .


PACKING COSTS . . . .


PROCESSING, WAREHOUSING AND SELLING .


WHOLESALING AND RETAILING COSTS . .


COSTS OF MARKETING CHANNEL FUNCTIONS .


SUMMARY . . . .


REFERENCES . . . .


Page


*o i
. . . i


. . . i


. . . ii


. . . iii


. . . v


. . . 1


AND ON-TREE PRICES 1


. . . 3


. . . 8


. . . 12


. . . 19


. . . 25


. . . 29


. . . 31


. . . 34














LIST OF TABLES


Table Page

1 Florida citrus bearing acres by type of fruit, 1959-60
through 1976-77 seasons . . . . 2

2 Florida citrus production by type of fruit, 1959-60
through 1976-77 seasons .... ... . 4

3 On-tree value of Florida citrus production by type of
fruit, 1959-60 through 1976-77 seasons . . 5

4 Average value of citrus production per acre of citrus
by type of fruit, 1959-60 through 1976-77 seasons . 6

5 On-tree price per box of Florida citrus by type of
fruit, 1959-60 through 1976-77 seasons . . 7

6 Picking and hauling costs and indices for Florida
oranges, 1959-60 through 1976-77 seasons . . 9

7 Picking and hauling costs and indices for Florida
grapefruit, 1959-60 through 1976-77 seasons . .. 10

8 Picking and hauling costs and indices for Florida
tangerines, 1959-60 through 1976-77 seasons . .. 11

9 Cost components that make up the total cost of packing
and selling 1-3/5 bushels of grapefruit in 4/5 bushel
fiberboard cartons, 1959-60 through 1976-77 seasons 15

10 Relative changes in the cost components that make up
the total cost of packing 1-3/5 bushels of Florida
oranges in 4/5 bushel cartons, 1959-60 through 1976-77
seasons . . . . ... ...... 16

11 Utilization of oranges and Temples by type of processed
products, 1959-60 through 1976-77 seasons . ... 20

12 Costs of processing, warehousing and selling Florida
concentrated orange juice in 48 6-ounce cans in cases,
450 Brix, 1959-60 through 1976-77 seasons . ... 21










LIST OF TABLES (Cont.)


Table Page

13 Warehousing cost, carryover ending stocks and indices
for Florida FCOJ, 1959-60 through 1976-77 seasons 22

14 Utilization of grapefruit by type of processed products,
1959-60 through 1976-77 seasons . .... . 23

15 Cost of processing, warehousing and selling Florida
unsweetened grapefruit juice in 12 46-ounce cans of
juice in cases, 1959-60 through 1976-77 seasons. . 24

16 FOB packinghouse and retail prices for white, seedless,
Florida grapefruit, 1964-65 through 1976-77 seasons 26

17 FOB shipping point and retail prices for 12 6-ounce
cans of frozen concentrated orange juice, 1964-65
through 1976-77 seasons . . . ... 27

18 FOB shipping point and retail prices for 12 46-ounce
cans of single-strength grapefruit juice, 1964-65
through 1976-77 seasons . . ... . 28

19 Proportion of the consumer's food dollar spent on
6-ounce cans of frozen concentrated orange juice that
is returned to various marketing channel participants,
1964-65 through 1976-77 seasons . . ... 30

20 Proportion of the consumer's food dollar spent on 46-
ounce cans of single-strength grapefruit juices that
is returned to various marketing channel participants,
1964-65 through 1976-77 seasons . .. . 32

21 Proportion of the consumer's retail food dollar spent
on fresh grapefruit that is returned to various market-
ing channel participants, 1964-65 through 1976-77
seasons . . . . . 33













LIST OF FIGURES


Figure Page

1 Utilization of Florida citrus from 1945-46 through
1976-77 seasons . .. .. . . 13

2 Certified fresh citrus fruit shipments from Florida
1946-47 through 1976-77 seasons . . .. 14

3 Proportion of Florida citrus fruit delivered to pack-
inghouses that is actually packed, 1955-56 through
1976-77 seasons . . . . ... 17

4 Certified fresh citrus shippers in Florida by volume
at 5-year intervals, 1938-39 through 1975-76 seasons. 18














GROWERS' RETURNS AND MARKETING COSTS
AT EACH STAGE OF THE
VERTICAL MARKET SYSTEM FOR CITRUS


Daniel S. Tilley and Richard L. Kilmer


INTRODUCTION


The United States Department of Agriculture has published the
farmer's share of the consumer's food dollar on commodities for many
years. The recent increase in food prices has stimulated an interest
in the cost of marketing functions performed between the producer and
consumer. The purpose of this report is to look at the costs associated
with each level in the fresh and processed citrus marketing channel. In
this paper (1) grove production prices and value of production, (2)
picking and hauling costs, (3) fresh citrus packing and selling costs,
(4) citrus processing, warehousing and selling costs, and (5) the whole-
saling and retailing stage in the citrus production/marketing process
are examined.


TRENDS IN PRODUCTION, VALUE OF PRODUCTION,
AND ON-TREE PRICES


Since 1970-71, total citrus acreage in Florida has declined.
Increases in grapefruit acreage have been offset by decreases in orange
acreage (Table 1). Prior to 1970-71 orange acreage had been rapidly
increasing while grapefruit acreage had remained relatively stable.



DANIEL S. TILLEY is a research economist in the Economic Research
Department, Florida Department of Citrus and assistant professor in the
Food and Resource Economics Department. RICHARD L. KILMER is an assis-
tant professor in the Food and Resource Economics Department.






Table 1.--Florida citrus bearing acres by type of fruit, 1959-60 through 1976-77 seasons


All round oranges All grapefruit Specialty fruita All citrus
Season
Acreage Index Acreage Index Acreage Index Acreage Indexb

1000 acres Percent 1000 acres Percent 1000 acres Percent 1000 acres Percent

1959-60 370.0 70 92.3 93 45.9 78 508.2 74
1960-61 374.1 71 92.5 93 48.3 82 514.9 75
1961-62 408.7 78 94.0 95 47.0 80 549.7 80
1962-63 370.0 70 88.0 89 41.3 70 499.3 73
1963-64 399.0 76 83.0 84 39.1 66 510.1 75

1964-65 435.0 83 84.0 85 42.3 72 561.3 82
1965-66 472.0 90 86.0 87 45.2 77 603.2 88
1966-67 522.0 99 87.0 88 49.7 84 658.7 96
1967-68 557.6 106 87.5 88 54.6 93 699.7 102
1968-69 601.6 114 91.2 92 61.4 104 754.2 110

1969-70 636.1 121 98.7 99 71.6 121 806.4 118
1970-71 667.1 127 108.3 109 79.5 135 854.9 125
1971-72 623.8 119 112.6 113 73.9 125 810.3 118
1972-73 619.6 118 114.6 115 74.9 127 809.1 118
1973-74 614.6 117 115.8 117 73.4 124 803.8 118

1974-75 610.4 116 115.4 116 73.7 125 799.5 117
1975-76 596.4 113 117.9 119 70.2 119 784.5 115
1976-77 594.3 113 119.3 120 69.6 118 783.2 115

Index 526.2 100 99.3 100 59.0 100 683.9 100


Source: Florida Agricultural Statistics, Citrus Summary [3].
a
Includes Temples, tangelos, tangerines, honey tangerines and limes.

Percentage of average value for 1959-60 through 1976-77 seasons which is shown in the bottom
row of the table.










Specialty fruit acreage has remained fairly stable since making sizable
increases during the 1966 through 1971 period. In 1976-77, orange,
grapefruit and specialty fruit accounted for 76, 15 and 9 percent of
total citrus acreage, respectively.
While total citrus acreage has been declining, citrus production
has continued to increase (Table 2). The increases are due to the
higher yields that are associated with the maturation of the trees
planted from 1960 through 1970. Thus while the 1970-71 through 1976-77
period has shown a decrease in acreage, production has continued to
increase, setting new highs for the 1974-75, 1975-76 and 1976-77 seasons.
The total nominal on-tree value of the citrus crop has also been at
relatively high levels although increases have not been shared by all
types of plantings. Orange and specialty fruit crop values have held at
relatively high levels from 1971-72 to 1976-77 and grapefruit returns
declined relative to levels in 1971-72, 1972-73 and 1973-74 but are still
above returns reported for the 1960's (Table 3).
Per acre and per box nominal returns are shown and included in
Tables 4 and 5, respectively. From 1972-73 to 1976-77 the indices for the
per acre returns are generally higher than the indices for the per box
returns because yields per acre have increased which moderates the effects
of lower per box prices on returns per acre. Both series show substantial
variation over time.


HARVESTING AND HAULING COSTS


Harvesting and hauling represent the first process in the marketing
channel from grove to consumer. Picking also represents the least
mechanized and most labor intensive operation in the marketing channel.
Recent increases in harvesting and hauling costs--especially labor costs--
have been of great concern to the industry. While mechanical harvesting
may, in the future, work to deter the rapidly increasing harvesting costs,
mechanical harvesting adoption has been slow. Harvesting and hauling
costs remain a major concern.






Table 2.--Florida citrus production by type of fruit, 1959-60 through 1976-77 seasons


All round oranges All grapefruit Specialty fruita All citrus
Season b b b -b
Production Index Production Index Production Index Production Index

1000 1000 1000 1000
1-3/5 boxes Percent 1-3/5 boxes Percent 1-3/5 boxes Percent 1-3/5 boxes Percent

1959-60 87,600 70 30,500 78 7,470 64 125,570 71
1960-61 82,700 66 31,600 81 9,980 85 124,280 71
1961-62 108,800 87 34,800 89 13,210 112 156,810 89
1962-63 72,500 58 30,000 77 5,250 45 111,750 64
1963-64 54,900 44 26,300 67 8,620 73 89,820 51

1964-65 82,400 66 31,900 82 9,350 80 123,650 70
1965-66 95,900 77 34,900 89 10,190 87 140,990 80
1966-67 139,500 112 43,600 112 11,895 101 194,995 111
1967-68 100,500 80 32,900 84 10,270 87 143,670 82
1968-69 129,700 104 39,900 102 11,500 98 181,100 103

1969-70 137,700 110 37,400 96 12,405 106 187,505 107
1970-71 142,300 114 42,900 110 13,250 113 198,450 113
1971-72 137,000 110 47,000 120 13,000 111 197,000 112
1972-73 169,700 136 45,400 116 13,200 112 228,300 130
1973-74 165,800 133 48,100 123 14,350 122 228,250 130

1974-75 173,300 139 44,600 114 15,850 135 233,750 133
1975-76 181,200 145 49,100 126 17,530 149 247,830 141
1976-77 186,800 150 51,500 132 14,250 121 252,550 144

Index 124,905 100 39,022 100 11,753 100 175,903 100


Source: Florida Agricultural Statistics, Citrus Summary [3].

aIncludes Temples, tangelos, tangerines, honey tangerines and limes.

bPercentage of average value for 1959-60 through 1976-77 seasons.






Table 3.--On-tree value of Florida citrus production by type of fruit, 1959-60 through 1976-77 seasons


All round oranges All grapefruit Specialty fruit All citrus
Season
Value Index Value Index Value Index Value Indexb

Thousand $ Percent Thousand $ Percent Thousand $ Percent Thousand $ Percent

1959-60 170,057 77 32,043 54 19,635 71 221,735 72
1960-61 244,376 110 30,138 51 25,348 92 299,862 97
1961-62 203,255 92 23,498 40 23,506 85 250,259 81
1962-63 196,116 88 37,146 63 17,421 63 250,683 81
1963-64 243,935 110 59,147 100 34,005 123 337,087 109

1964-65 200,276 90 46,892 80 27,308 99 274,476 89
1965-66 155,625 70 47,471 81 22,312 81 225,408 73
1966-67 130,526 59 32,393 55 15,156 55 203,174 66
1967-68 207,432 94 66,317 113 34,321 124 308,070 100
1968-69 218,660 99 39,011 66 27,723 100 285,394 92

1969-70 156,876 71 63,526 108 22,055 80 242,457 78
1970-71 208,146 94 81,514 138 24,228 88 313,888 101
1971-72 280,317 126 108,991 185 33,991 123 423,299 137
1972-73 265,361 120 94,635 161 29,434 107 389,330 126
1973-74 244,691 110 79,879 136 30,692 111 355,262 115

1974-75 280,350 126 76,367 130 36,498 132 393,215 127
1975-76 321,449 145 72,155 122 42,552 154 436,156 141
1976-77 263,319 119 69,309 118 30,440 110 363,068 117

Index 221,709 100 58,912 100 27,590 100 309,601 100


Source: Florida Agricultural Statistics, Citrus Summary [3].

Includes Temples, tangelos, tangerines, honey tangerines and limes.

percentage of average values for 1959-60 through 1976-77 seasons.







Table 4.--Average value of citrus
1976-77 seasons


production per acre of citrus by type of fruit, 1959-60 through


All round oranges All grapefruit Specialty fruita All citrus
Season-- b b
Season Value Indexb Value Indexb Value Index Value Indexb

$/acre Percent $/acre Percent $/acre Percent $/acre Percent

1959-60 459.62 106 347.16 60 427.78 89 436.31 96
1960-61 653.24 150 325.82 56 524.80 109 582.37 128
1961-62 497.32 114 249.98 43 500.13 104 455.27 100
1962-63 530.04 122 422.11 73 421.82 87 502.07 110
1963-64 628.70 145 712.61 123 869.69 180 660.83 145

1964-65 460.41 106 558.24 96 645.58 134 489.00 107
1965-66 329.71 76 551.99 95 493.63 102 373.69 82
1966-67 250.05 58 372.33 64 304.95 63 308.45 68
1967-68 372.01 86 757.91 130 628.59 130 440.29 96
1968-69 363.46 84 427.75 74 451.52 94 378.41 83

1969-70 246.62 57 643.63 111 308.03 64 300.67 66
1970-71 312.02 72 752.67 130 304.76 63 367.16 80
1971-72 449.37 103 967.95 167 459.96 95 522.40 114
1972-73 428.28 99 825.79 142 392.98 81 481.19 105
1973-74 398.13 92 689.80 119 418.15 87 441.98 97

1974-75 459.29 106 661.76 114 495.22 103 491.83 108
1975-76 538.98 124 612.00 105 606.15 126 555.97 122
1976-77 443.07 102 580.96 100 437.36 91 463.57 101

Index 434.46 100 581.14 100 482.84 100 456.73 100


Source: Florida Agricultural Statistics, Citrus Summary [3].

aIncludes Temples, tangelos, tangerines, honey tangerines and limes.

bPercentage of average value for 1959-60 through 1976-77 seasons.






Table 5.--On-tree price per box of Florida citrus by type of fruit, 1959-60 through 1976-77 seasons


All round oranges All grapefruit Specialty fruit All citrus
Season
Price Index Price Index Price Index Price Indexb

$/box Percent $/box Percent $/box Percent $/box Percent

1959-60 1.96 101 1.05 70 2.62 108 1.76 95
1960-61 2.98 153 .96 64 2.53 104 2.41 130
1961-62 1.88 96 .67 45 1.77 73 1.59 85
1962-63 2.71 139 1.24 83 3.31 136 2.24 120
1963-64 4.44 228 2.24 150 3.94 162 3.75 202

1964-65 2.43 125 1.47 98 2.92 120 2.21 119
1965-66 1.62 83 1.36 91 2.18 90 1.59 85
1966-67 .94 48 .74 49 1.27 52 1.04 56
1967-68 2.07 106 2.01 134 3.34 137 2.14 115
1968-69 1.68 86 .98 66 2.41 99 1.57 84

1969-70 1.14 58 1.70 114 1.77 73 1.29 69
1970-71 1.46 75 1.91 128 1.82 75 1.58 85
1971-72 2.04 105 2.32 155 2.61 107 2.14 115
1972-73 1.56 80 2.08 139 2.22 91 1.70 91
1973-74 1.47 75 1.66 111 2.14 88 1.56 84

1974-75 1.62 83 1.72 115 2.30 95 1.68 90
1975-76 1.77 91 1.47 98 2.43 100 1.76 95
1976-77 1.41 72 1.35 90 2.14 88 1.44 77

.Index 1.95 100 1.50 100 2.43 100 1.86 100


Source: Florida Agricultural Statistics, Citrus Summary [3].

Includes Temples, tangelos, tangerines, honey tangerines and limes.

bPercentage of average value for 1959-60 through 1976-77 seasons.









Orange harvesting and hauling costs in .1976-77 are estimated to
have increased to 153 percent of the 18-year average, while grapefruit
and tangerine picking and hauling costs are estimated to have increased
to 155 and 141 percent, respectively, (Tables 6, 7, 8) of the 18-year
average. Of the items that make up total picking and hauling costs for
oranges, picking labor is the item accounting for the largest proportion
of the total. Accounting for 50 percent of the total, it increased
steadily from 1959-60 through 1973-74 and then declined slightly. Other
labor, however, has increased and continues to increase (27 percentage
points in the last two years). Finally, fuel, maintenance and deprecia-
tion has increased strongly since 1968-69. Similar information and
trends for grapefruit and tangerines is shown in Tables 7 and 8.
The relatively slow increase in picking labor costs for tangerines
(Table 8) reflects a change in the picking method. During the 18-year
period the proportion of the tangerines individually clipped has declined.
Clipping involves manually handling each piece of fruit and using a shear
to remove each fruit from the tree. Because clipping tangerines reduces
a picker's capacity, pickers generally require a higher per box wage when
clipping is required. As the proportion of tangerines pulled rather than
clipped has increased, the cost of picking tangerines has decreased
relative to the cost of picking oranges and grapefruit.
In addition to the type of fruit and grove conditions, several other
economic factors have been found to be related to the piece rate for
citrus pickers. Walker [22] has shown that the most important determinants
of the piece rate for citrus pickers are the nonfarm wage rate and the
unemployment rate. The results indicate that the piece rate and the non-
farm wage rate in food and kindered industries in Florida are positively
related and that the piece rate and the Florida unemployment rate are
negatively related.


FRESH PACKING AND SELLING COSTS


While over 90 percent of oranges, 60 percent of grapefruit and 25
percent of tangerines are generally used in processed citrus products








Table 6.--Picking and hauling costs and indices for Florida oranges, 1959-60 through 1976-77 seasons


Oranges

Labor Fuel, Administrative
Season maintenance & Total
a b
Pickers Other depreciation other

Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc

C/box Percent C/box Percent C/box Percent C/box Percent C/box Percent

1959-60 18.77 52 10.59 60 8.43 70 7.61 109 45.40 63
1960-61 18.90 53 12.52 71 8.37 69 6.34 91 46.13 64
1961-62 19.64 55 12.17 69 7.56 63 4.83 69 44.20 61
1962-63 22.50 63 13.29 76 9.98 83 6.74 97 52.51 72
1963-64 24.24 68 14.17 81 10.33 85 8.03 115 56.77 78

1964-65 26.38 74 13.35 76 9.72 80 5.64 81 55.09 76
1965-66 28.54 80 14.43 82 9.88 82 5.23 75 58.08 80
1966-67 29.53 82 13.79 79 8.42 70 5.25 75 56.99 79
1967-68 33.42 93 16.96 97 10.88 90 6.15 88 67.41 93
1968-69 37.51 105 15.69 90 10.82 89 5.73 82 69.75 96

1969-70 38.54 107 17.00 97 12.32 102 6.44 92 74.30 103
1970-71 38.70 108 17.99 103 12.75 105 8.46 121 77.90 108
1971-72 40.92 114 22.34 128 13.38 111 7.83 112 84.47 117
1972-73 52.60 147 22.00 126 15.06 125 7.20 103 96.86 134
1973-74 57.86 161 23.10 132 16.57 137 9.21 132 106.74 147

1974-75 51.87 145 22.87 131 16.53 137 8.25 118 99.52 137
1975-76 50.61 141 25.52 146 17.38 144 7.20 103 100.71 139
1976-77 54.96 153 27.60 158 19.29 160 9.34 134 111.19 153

Index 35.86 100 17.52 100 12.09 100 6.97 100 72.45 100


Source: [11, 16, 19].

aSupervisory, loaders, drivers, other labor, payroll taxes.
b
Insurance, taxes, licenses, supplies, equipment rental, migratory labor, misc.

Percentage of 1959-60 through 1976-77 average values.







Table 7.--Picking and hauling costs and indices for Florida grapefruit, 1959-60 through 1976-77 seasons


Grapefruit

Labor Fuel, Administrative
Season maintenance & Total
Pickers Other depreciation other

Cost Indexc Cost Index Cost Indexc Cost Indexc Cost Indexc

C/box Percent C/box Percent C/box Percent C/box Percent C/box Percent

1959-60 13.55 53 10.42 64 7.14 62 4.77 88 35.88 61
1960-61 13.84 55 11.25 96 8.13 70 4.64 86 37.86 65
1961-62 14.31 56 10.93 67 7.09 61 3.83 71 36.16 62
1962-63 15.11 60 11.66 72 9.05 78 5.44 101 41.26 70
1963-64 17.19 68 12.40 76 9.43 81 6.18 114 45.20 77

1964-65 18.78 74 12.83 79 8.97 77 4.16 77 44.74 76
1965-66 21.18 83 13.51 83 10.29 89 4.75 88 49.73 85
1966-67 21.75 86 13.55 84 8.86 76 4.23 78 48.39 83
1967-68 24.21 95 15.36 95 10.59 91 4.61 85 54.77 94
1968-69 25.39 100 14.60 90 10.48 90 4.50 83 54.97 94

1969-70 26.86 106 16.59 102 11.68 101 5.03 93 60.16 103
1970-71 26.73 105 16.96 105 12.18 105 5.78 107 61.65 105
1971-72 28.68 113 18.40 114 12.66 109 6.28 116 66.02 113
1972-73 33.86 133 20.22 125 14.28 123 5.45 101 73.81 126
1973-74 38.75 153 23.02 142 15.54 134 7.72 143 85.03 145

1974-75 38.54 152 22.52 139 15.70 135 6.54 121 83.30 142
1975-76 38.46 152 22.72 140 17.52 151 5.80 107 84.50 144
1976-77 39.64 156 24.81 153 18.94 163 7.42 137 90.81 155

Index 25.38 100 16.21 100 11.59 100 5,40 100 58.57 100


Source: [11, 16, 19].

aSupervisory, loaders, drivers, other labor, payroll taxes.

Insurance, taxes, licenses, supplies, equipment rental, migratory labor, misc.

Percentage of 1959-60 through 1976-77 average.









Table 8.--Picking and hauling costs and indices for Florida tangerines, 1959-60 through 1976-77 seasons


Tangerines

Labor Fuel, Administrative
Season maintenance & Total
Pickers Other depreciation other

Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc

C/b6x Percent C/box Percent /box Percent C/box Percent C/box Percent


1959-60
1960-61
1961-62
1962-63
1963-64

1964-65
1965-66
.1966-67
1967-68
1968-69

1969-70
1970-71
1971-72
1972-73
1973-74

1974-75
1975-76
1976-77

Index


58.06
57.11
59.79
66.86
69.83

73.57
75.03
79.55
82.66
83.73

91.02
87.52
87.99
96.22
100.38

104.19
102.97
108.88

82.52


70
69
72
81
85

89
91
96
100
101

110
106
107
117
122

126
125
132

100


18.03
18.86
17.78
20.33
21.83

21.68
24.19
26.18
27.52
27.71

29.33
33.16
39.61
37.49
42.19

40.01
41.41
46.64

29.66


61
64
60
69
74

73
82
88
93
93

99
112
134
126
142

135
140
157

100


8.19
9.73
7.89
11.01
11.41

10.59
11.04
9.6t;
12.03
12.19

13.63
14.85
15.60
17.39
18.85

18.30
19.55
21.43

13.52


61
72
58
81
84

78
82
71
89
90

101
110
115
129
139

135
145
159

100


9.85
9.00
6.61
10.71
11.37

8.45
9.17
8.84
9.57
8.90

9.02
12.02
10.87
10.75
12.33

11.09
9.34
14.40

10.13


97
89
64
103
110

87
88
85
92
86

87
116
105
104
*119

107
90
139

100


94.13
94.70
92.07
108.91
114.44

114.29
119.43
124.21
131.78
132.53

143.00
147.55
154.07
161.85
173.75

173.59
173.27
191.35


105
109
113
119
128

128
128
141


135.83 100


Source: [11, 16, 19].

aSupervisory, loaders, drivers, other labor, payroll taxes.
b
Insurance, taxes, licenses, supplies, equipment rental, migratory labor, misc.

cPercentage of 1959-60 through 1976-77 average.









(Figure 1), the total volume of Florida citrus packed for fresh shipment
has increased every year since the 1968-69 season (Figure 2) except
1976-77, a freeze year. However, orange and tangerine shipments have
remained quite stable while grapefruit shipments have been increasing.
For some growers, the fresh market is their primary market and packing
cost is the second key cost element in the marketing channel that affects
on-tree grower returns.


PACKING COSTS


The 4/5-bushel fiberboard carton is the predominant container used.
For the 1976-77 season, nearly 63 percent of commercial orange and tan-
gerine shipments and 80 percent of commercial grapefruit shipments were
in the 4/5 carton. Total packing and selling costs for grapefruit and
oranges have risen steadily since 1959-60 (Tables 9, 10). All expense
categories have not risen by the same proportions. Direct operating
expenses have increased more relative to the base period than any other
category.
Labor costs have not increased as much as most other items. This
may be attributed in part to increasing mechanization in the handling
and packing operations. The shift to pallet box instead of field box
receiving and dumping and increased use of mechanical packer aids are
two changes that have helped temper the increase in labor costs.
Other factors that influence packing costs include packout percent-
age (Figure 3) and packinghouse size. Kilmer and Tilley [12] estimate
that a 10 percent increase in packout will decrease packing costs about
3 cents per box. High (low) packout means that less (more) fruit must be
handled in order to pack a given volume.
If low packout adversely affects the volume of fruit a packinghouse
packs in a given year, low packout may have a secondary impact on costs
because of the decrease in volume. While the total volume of fruit
handled has been increasing, the number of firms commercially packing
fruit has decreased and the average volume per house has increased
(Figure 4).






100 -


90 --'


wn / \"
80 -

S70 Q Oranges


o 60-

50- Grapefruit


.0 40 -



e \ / / ,,.
4 o 30. .

20 / \ ...J4- Tangerines


10 -
*I
4'. I 'w I I w \ I '

1945-46 1950-51 1955-56 1960-61 1965-66 1970-71 1975-76

Season


Figure I. Utilization of Florida citrus from 1945-46 through 1976-77 seasons.

Source: Florida Canner's Association [5].





14


96-


90-


84-


78-


72-


66-


60-


54


48


42_


36-


30-


24-


18-


12-


6-


Oranges


.".
.. .





SGrapefruit
* **


Tangerines

10
^'-- ^"" -"
% N^ ^ -----
\ c,


I I I I I I I I I I I I I I I I 1
1947-48 1951-52 1956-57 1961-62 1966-67 1971-72


Figure 2. Certified fresh citrus fruit shipments from Florida 1946-47
through 1976-77 seasons.

Source: Florida Division of Fruit and Vegetable Inspection [7].


ph.
I\




1"

* I

'i


\ ^Total Citrus



I *

i



^ ; \ ..\
I :


i /

i/







Table 9.--Cost components that make up the total cost of packing and selling 1-3/5 bushels of grapefruit
in 4/5 bushel fiberboard cartons, 1959-60 through 1976-77 seasons


Direct ndirec Selling Total
Materials Labor a Indirectb administrative packing
Materials Labor operating operating
ear o& other selling

Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc

$/box Percent $/box Percent S/box Percent S/box Percent $/box Percent $/box Percent

1959-60 .5979 110.4 .2914 61.3 .0581 53.7 .0405 44.5 .2763 64.5 1.2642 76.9
1960-61 .5193 96.0 .3020 63.5 .0608 56.2 .0430 47.2 .2791 65.2 1.2042 73.2
1961-62 .5242 96.8 .3492 73.4 .0594 55.0 .0545 59.8 .2946 68.8 1.2819 78.0
1962-63 .4818 89.0 .3621 76.1 .0723 66.9 .0551 60.5 .3144 73.4 1.2857 78.2
1963-64 .4534 83.7 .3733 78.5 .0646 59.8 .0607 66.6 .3337 78.0 1.2857 78.2

1964-65 .4721 87.2 .4038 85.0 .0772 71.4 .0663 72.8 .3519 82.2 1.3713 83.4
1965-66 .4835 89.3 .4229 89.0 .0753 69.7 .0675 74.1 .3628 84.7 1.4120 85.9
1966-67 .4952 91.4 .4192 88.1 .0666 61.6 .0668 73.3 .3651 85.2 1.4129 88.0
1967-68 .4918 90.8 .4862 102.2 .0919 85.0 .0850 93.3 .4009 93.6 1.5558 94.6
1968-69 .4752 87.8 .5085 107.0 .1029 95.2 .0974 107.0 .3849 89.9 1.5689 95.4

1969-70 .4756 87.8 .4938 103.8 .1185 109.6 .1019 111.9 .4734 110.5 1.6632 101.1
1970-71 .4864 89.8 .5055 106.3 .1196 110.6 .1083 118.9 .4914 114.7 1.7112 104.0
1971-72 .4718 87.1 .5270 110.8 .1217 112.6 .1017 111.6 .4965 116.0 1.7187 104.5
1972-73 .5150 95.1 .5147 108.2 .1193 110.4 .1068 117.2 .5181 121.0 1.7739 107.9
1973-74 .6017 111.1 .6210 130.6 .1430 132.3 .1484 162.9 .5471 127.7 2.0612 125.3

1974-75 .6903 127.5 .6347 133.5 .1954 180.8 .1346 147.7 .5520 128.9 2.2070 134.2
1975-76 .7517 138.8 .6175 129.8 .1752 162.1 .1403 154.0 .5864 137.0 2.2711 138.1
1976-77 .7592 140.2 .7286 153.2 .2232 206.5 .1613 177.1 .6814 159.1 2.5537 155.3

Index .5415 100.0 .4756 100.0 .1081 100.0 .0911 100.0 .4283 100.0 1.6446 100.0


Source: [9, 15, 18].

power, lights, water, supplies equipment.

Insurance, taxes, licenses, depreciation, rent.

CPercent of 1959-60 through 1976-77 average.






Table 10.--Relative changes in the cost components that make up the total cost of packing
of Florida oranges in 4/5 bushel cartons, 1959-60 through 1976-77 seasons


1-3/5 bushels


Selling Total
Direct Indirect Selling Total
Materials Labor rt a actb administrative packing &
MtraYear Loperating operating selling
Year & other selling

Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc Cost Indexc

$/box Percent S/box Percent S/box Percent S/box Percent S/box Percent S/box Percent

1959-60 .4649 90.9 .3697 70.5 .0805 63.5 .0739 67.8 .2758 64.3 1.2648 74.4
1960-61 .4818 94.2 .3998 76.2 .0896 70.7 .0833 76.4 .2784 64.9 1.3329 78.4
1961-62 .4857 95.0 .4012 76.5 .0350 67.0 .0693 63.6 .2776 64.7 1.3188 77.5
1962-63 .4639 90.7 .4507 85.9 .1076 84.9 .0915 83.9 .3819 89.0 1.4956 87.9
1963-64 .4372 85.5 .4277 81.5 .0926 73.0 .0804 73.8 .3823 89.1 1.4202 83.5

1964-65 .4433 86.7 .4531 86.4 .0906 71.5 .0776 71.2 .3749 87.4 1.4395 84.6
1965-66 .4634 90.6 .4795 91.4 .0926 73.0 .0843 73.3 .3743 87.3 1.4941 87.9
1966-67 .4723 92.4 .4790 91.3 .0850 67.0 .0820 75.2 .3667 85.5 1.4850 87.3
1967-68 .4645 90.9 .5182 98.8 .1059 83.5 .0877 80.5 .3950 92.1 1.5713 92.4
1968-69 .4637 90.7 .5415 103.2 .1273 100.- .1053 96.6 .3977 92.7 1.6355 96.2

1969-70 .4756 93.0 .4938 94.1 .1185 93.5 .1019 93.5 .4734 110.4 1.6632 97.8
1970-71 .4699 91.9 .5187 98.9 .1275 100.6 .1361 124.9 .4756 110.9 1.7278 101.6
1971-72 .4440 86.9 .5765 109.9 .1484 117.0 .1534 140.7 .4885 113.0 1.8108 106.5
1972-73 .4984 97.5 .6037 115.1 .1397 110.2 .1243 114.0 .4986 116.3 1.8647 109.6
1973-74 .5751 112.5 .6601 125.8 .1700, 134.1 .1616 148.3 .5247 122.3 2.0915 123.0

1974-75 .6747 132.0 .6449 122.9 .1829 144.2 .1265 116.1 .5476 127.7 2.1766 128.0
1975-76 .7082 138..5 .6493 123.7 .1829 144.2 .1287 118.1 .5464 127.4 2.2155 130.3
1976-77 .7144 139.7 .7768 148.0 .2565 202.3 .1941 178.1 .6614 154.2 2.6032 153.1

Index .5112 100.0 .5247 100.0 .1268 100.0 .1090 100.0 .4289 100.0 1.7006 100.0


Source: 19, 15, 18].

another direct operating expenses include power, lights, water, repair, maintenance and other
miscellaneous supplies.

bIndirect operating expenses include insurance, taxes, licenses, depreciation and rent.


CPercent of average for 1959-60 through 1976-77.


















74-


71-


68-





0


] 59.
-4



4 56


53.


50-


1955-56


I
1958-59


1 1-
1961-62 1964-65


. I U U p


1967-68


1970-71 1973-74


1976-77


Season


Figure 3. Proportion of Florida citrus fruit delivered to packinghouses that is actually packed, 1955-56
through 1976-77 seasons.

Sources (9, 15, 18].











425
0

400

% Total number of packinghouses
375 -


350


325 \
\W

300.


275 0 0





225 \
Average volume per house
(1000 4/5-boxes) \
200 \
o




150- 0

1938-39 1943-44 1948-49 1953-54 1958-59 1963-64 1968-69 1973-74
Season


Figure 4. Certified fresh citrus shippers in Florida by volume at 5-year intervals, 1938-39 through 1975-76
seasons.

Source: Florida Division of Fruit and Vegetable Inspection [7].








PROCESSING, WAREHOUSING AND SELLING


Over 90 percent of oranges and 60 percent of grapefruit enter the
processing channel (Figure 1). The processing channel is a multiple
product channel in which frozen concentrate, chilled and canned products
are produced. For each product there are a different set of factors
that may influence costs. In order to simplify presentation, the major
product for oranges and grapefruit will be used to illustrate the cost
trends.
For oranges, frozen concentrate is the dominant product form
(Table 11). For one case of 48 six-ounce cans, warehousing costs have
shown the greatest variability and the greatest percentage increase
(Table 12) of all processing, warehousing and selling costs. One potential
explanation for the increase and cost variability over time is the level
of inventory as measured by carryover at the end of the season. Carryover
has also increased and shown a great deal of variability since the 1959-60
season (Table 13). During the period, average warehousing costs increased
from $0.08 to $0.22 per case of 48 six-ounce cans, and ending inventory of
concentrate increased from 9.7 million gallons to 53 million gallons. Both
data series have shown great variability.
Other items were quite stable until the last six seasons. Material
costs were just below base period levels during the 1971-72 season but
increased to 143 percent of the base period level in the 1974-75 season and
then decreased (Table 12). Labor expenses have shown a more dramatic
increase over the past six seasons by increasing to 156 percent of the
average level. Other processing and administrative expenses have increased
to 135 and 149 percent, respectively, and total processing costs have
trended upward since the 1964-65 season.
For grapefruit, the dominant product form has been canned single-
strength juice (Table 14). For one case of 12 46-ounce cans, many of the
items have followed trends similar to those for FCOJ. Other processing
expenses have shown the greatest increase relative to the base period
(174 in 1976-77). Total processing costs have increased dramatically in
the past six years to 146 percent of the base period (Table 15).





Table 11.--Utilization of oranges and Temples py type of processed products, 1959-60 through 1976-77
seasons


Canned single- Frozen Chilled juice,
strength juice, concentratea sections and salads Total processed
sections and salads
Season
Boxes Percent Boxes Percent Boxes Percent Boxes Percent
used of total used of total used of total used of total

1000 boxes Percent 1000 boxes Percent 1000 boxes Percent 1000 boxes Percent

1959-60 10,231 14.6 51,957 74.3 7,769 11.1 69,957 100
1960-61 7,309 10.5 56,039 80.5 6,297 9.0 69,645 100
1961-62 9,673 10.6 73,986 80.7 7,970 8.7 91,629 100
1962-63 9,084 14.6 47,176 75.7 6,066 9.7 62,326 100
1963-64 5,467 12.1 34,206 75.6 5,548 12.3 45,227 100

1964-65 6,933 10.0 54,511 78.7 7,833 11.3 69,276 100
1965-66 7,879 9.5 61,853 74.7 13,109 15.8 82,841 100
1966-67 9,960 8.0 96,857 78.1 17,289 13.9 124,106 100
1967-68 6,668 7.8 61,988 72.5 16,841 19.7 85,497 100
1968-69 9,064 7.6 92,167 76.9 18,629 15.5 119,860 100

1969-70 7,952 6.2 100,776 78.6 19,482 15.2 128,209 100
1970-71 8,622 6.5 103,554 78.1 20,476 15.4 132,652 100
1971-72 7,216 5.5 104,410 79.3 20,038 15.2 131,664 100
1972-73 8,766 5.4 132,211 81.6 21,135 13.0 162,112 100
1973-74 7,284 4.5 132,475 82.4 21,056 13.1 160,815 100

1974-75 7,102 4.3 135,515 81.7 23,311 14.0 165,928 100
1975-76 6,890 3.9 144,527 82.1 24,626 14.0 176,043 100
1976-77 7,937 4.3 147,782 80.6 27,628 15.1 183,347 100


Source: Florida Citrus Mutual Annual Statistical Report [5].

aIncludes oranges used in blended concentrates and processed hot pack concentrated orange juice.









Table 12.--Costs of processing, warehousing and selling Florida concentrated orange juice in 48 6-ounce cans in cases, 450 Brix, 1959-60 through
1976-77 seasons



rial Processing Other processing Selling, Total
Materials expenses Warehousing administrative and processing
Season other expenses cost

Cost Index Cost Indexb Cost Indexb Cost Indexb Cost Indexb Cost Indexb

S/case Percent $/case Percent S/case Percent S/case Percent S/case Percent $/case Percent


1.1769
1.1368
1.0586
1.0283
1.0300

.9789
.9982
1.0208
1.0128
1.0279

1.0271
1.0627
1.0771
1.1815
1.3285

1.6534
1.5213
1.4557


102.0
98.5
91.7
89.1
89.2

84.8
86.5
88.4
87.7
89.0

89.0
92.1
93.3
102.4
115.1

143.2
131.8
126.1


1959-60
1960-61
S1961-62
1962-63
1963-64

1964-65
1965-66
1966-67
1967-68
1968-69

1969-7Q
1970-71
1971-72
1972-73
1973-74

1974-75
1975-76
1976-77

Index


.2459
\2422
.1743
.2588
.2892

.2167
.2656
.2117
.2729
.2776

.2943
.2881
.2666
.2978.
.3865

.3654
.3394
.4463


86.1
84.8
61.1
90.6
101.3

75.9
93.0
74.2
95.6
97.2

103.1
100.9
93.4
104.3
135.4

128.0
118.9
156.3


.2855 100.0


Sources [10, 17, 20].


Includes utilities, maintenance and repairs, depreciation, rent, taxes,

percentage of average for 1959-60 through 1976-77.


insurance and miscellaneous other expenses.


1.1543 100.0


.4135
.4245
.3168
.6065
.4430

.3716
.3782
.2759
.3705
.3380

.3355
.3769
.3728
.4170
.4864

.5130
.5468
.6302

.4232


97.7
100.3
74.9
143.3
104.7

87.8
89.4
65.2
87.5
79.9

79.3
89.1
88.1
98.5
114.9

121.2
129.2
148.9

100.0


.0812
.0838
.1232
.1487
.1209

.1198
.1234
.1053
.1395
.1112

.1278
.1354
.1147
.1358
.1930

.2240
.2005
.2196

.1393


58.3
60.2
88.4
106.7
86.8

86.0
88.6
75.6
100.1
79.8

91.7
97.2
82.3
97.5
138.5

160.8
143.9
157.6

100.0


.2849
.3000
.3485
.6138
.8403

.4535
.6126
.4526
.4593
.4853

.5990
.5641
.5539
.5789
.6283

.6637
*.6359
.7366


.5451


52.3
55.0
63.9
112.6
154.2

83.2
112.4
83.0
84.3
89.0

109.9
102.5
101.6
106.2
115.3

121.8
116.7
135.1

100.0


2.2024
2.1873
2.0214
2.6561
2.7234

2.1405
2.3780
2.0663
2.2550
2.2408

2.3837
2.4272
2.3851
2.6640
3.0227

2.4195
3.2439
3.4884

2.5503


86.4
85.8
79.3
104.1
106.8

83.9
93.2
81.0
88.4
87.9

93.5
95.2
93.5
104.5
118.5

134.1
127.2
136.8

100.0










Table 13.--Warehousing cost, carryover ending stocks and indices for
Florida FCOJ, 1959-60 through 1976-77 seasons


Total b
Season December 1 Index Warehousing Index
a
carryover


mlu. gal.
450 Brix

9.663

13.631
33.750

11.399

10.136
21.814
12.828

27.225
12.885
17.400

26.566

22.568
28.000

48.431

48.861
50.759

53.709
25.995

26.646


Percent


36

51

127

58

38

82
48

102
48
65

100
85

105

182
183
190
202

98

100


Percent


source: [0, 17, 20
Source: [10, 17, 201.


1959-60

1960-61

1961-62

1962-63

1963-64
1964-65
1965-66

1966-67

1967-68
1968-69

1969-70
1970-71

1971-72
1972-73

1973-74
1974-75
1975-76

1976-77

Index


$/case
48 6-oz. cans

.0812

.0838

.1232

.1487
.1209

.1198
.1234

.1053
.1395
.1112
.1278

.1354

.1147

.1358
.1930
.2240
.2005


.1271


a


Source: Florida Canner's Association, [5].

percentage of average for 1959-60 through 1976-77.


64

66

97

117

95

94
97

83

110
87

101

107

90
107

152
176
158


100






Table 14.--Utilization of grapefruit by type of processed products, 1959-60 through 1976-77 seasons


Canned single- Frozen Chilled juice,
strength juice, concentrate sections and salads Total processed
sections and salads
Season
Boxes Percent Boxes Percent Boxes Percent Boxes Percent
used of total used of total used of total used of total

1000 boxes Percent 1000 boxes Percent 1000 boxes Percent 1000 boxes Percent

1959-60 11,494 80.8 1,613 11.3 1,119 7.9 14,226 100
1960-61 11,046 69.8 3,603 22.7 1,195 7.5 15,844 100
1961-62 12,385 74.8 2,773 16.7 1,402 8.5 16,506 100
1962-63 11,439 71.7 3,260 20.4 1,258 7.9 15,957 100
1963-64 7,387 63.8 2,407 20.8 1,784 15.4 11,578 100

1964-65 10,937 68.7 3,551 22.3 1,441 9.0 15,929 100
1965-66 13,242 67.6 4,010 20.4 2,363 12.0 19,615 100
1966-67 18,105 69.0 5,405 20.6 2,736 10.4 26,241 100
1967-68 13,411 74.1 1,793 9.9 2,904 16.0 18,108 100
1968-69 15,940 61.8 6,550 25.4 3,307 12.8 25,797 100

1969-70 15,604 67.4 4,579 19.7 2,983 12.9 23,166 100
1970-71 17,679 63.3 6,819 24.4 3,439 12.3 27,937 100
1971-72 17,121 57.0 8,725 29.0 4,201 14.0 30,047 100
1972-73 16,034 56.5 8,212 29.0 4,119 14.5 28,365 100
1973-74 16,794 57.2 8,732 29.7 3,843 13.1 29,369 100

1974-75 13,664 53.1 7,779 30.2 4,305 16.7 25,748 100
1975-76 14,410 50.8 8,987 31.7 4,974 17.5 28,371 100
1976-77 16,217 47.0 13,020 37.7 5,265 15.3 34,502 100


Source: [6].

aIncludes grapefruit used in blended concentrates and processed hot pack concentrated grape-
fruit juice.









Table 15.--Cost of processing, warehousing and selling
1976-77 seasons


Florida unsweetened grapefruit juice in 12 46-ounce cans of juice in cases, 1959-60 through


Selling, Total
MateialsProcessing Other processing Selling, Total
Materials lroe g O r proesa Warehousing administrative and processing
Season other expenses cost

Cost Index Cost Index Cost Index Cost Inde Costdexb Cost Indexb

S/case Percent S/case Percent S/case Percent $/case Percent S/case Percent $/case Percent

1959-60 1.0348 82.4 .1449 87.3 .1355 74.9 .0283 22.6 .1596 57.8 1.5031 75.0
1960-61 1.0616 84.6 .1447 87.2 .1378 76.1 .0375 30.0 .1854 67.1 1.5670 78.2
1961-62 1.0623 84.6 .0895 53.9 .1167 64.5 .0837 66.9 .1917 69.4 1.5439 77.1
1962-63 1.0726 85.5 .1174 70.7 .1505 83.1 .1054 84.3 .2752 99.6 1.7211 85.9
1963-64 1.0678 85.1 .1298 78.2 .1676 92.6 .0942 75.3 .2621 94.9 1.7215 85.9

1964-65 1.0849 86.4 .1120 67.5 .1218 67.3 .0809 64.7 .2220 80.3 1.6216 80.9
1965-66 1.1175 89.0 .1210 72.9 .1312 72.5 .0947 75.7 .2385 86.3 1.7029 85.0
1966-67 1.1241 89.6 .1304 78.6 .1164 64.3 .0929 74.3 .2133 77.2 1.6771 83.7
1967-68 1.1537 91.9 .1688 101.7 .1588 87.7 .1245 99.5 .2729 98.8 1.8787 93.8
1968-69 1.1971 95.4 .1745 105.1 .1497 82.7 .1109 88.6 .2320 84.0 1.8642 93.0

1969-70 1.1882 94.7 .2101 126.6 .1752 96.8 .1133 90.6 .2977 107.7 1.9845 99.0
1970-71 1.1780 93.8 .2081 125.4 .1983 109.6 .1337 106.9 .3412 123.5 2.0593 102.8
1971-72 1.2005 95.6 .2004 120.7 .2007 110.9 .1352 108.1 .3217 116.4 2.0585 102.7
1972-73 1.2583 100.2 .2104 126.7 .2157 119.2 .1756 140.4 .2956 107.0 2.1556 107.6
1973-74 1.3664 108.9 .1856 111.8 .2273 125.6 .2321 185.5 .3813 138.0 2.3927 119.4

1974-75 1.8672 148.8 .1920 115.7 .2336 129.1 .2293 183.3 .3470 125.6 2.8691 143.2
1975-76 1.7765 141.5 .1985 119.6 .3062 169.2 .1797 143.6 .3639 131.7 2.8248 141.0
1976-77 1.7825 142.0 .2501 150.7 .3143 173.6 .2007 160.4 .3715 134.5 2.9191 145.7

Indexb 1.2552 100.0 .1660 100.0 .1810 100.0 .1251 100.0 .2763 100.0 2.0036 100.0


Sources [10, 17, 20].

aIncludes utilities, maintenance and repairs, depreciation, rent, taxes, insurance and miscellaneous other expenses.

percent of average for 1959-60 through 1976-77.









WHOLESALING


RETAILING COSTS


In order


wholesaling


retail

data


to complete

d retailing


prices would


needed


available


have


to examine


specific


the marketing


costs


channel,


in addition


to be available.


the components of


products.


However,


to FOB


transportation,


shipping point


Unfortunately,

the FOB-retail m


FOB-retail


few of


and

the


argin are

price


differential

relationship


treated

then, d
deviate


orange


ata


from


can be examined


for several


juice,


on FOB


"card


to determine


seasons

canned


prices are not
" or "posted"


the nature of


fresh grapefruit,


single-strength

perfect because


prices


grapefruit


sales


changes


in the


frozen concen-


juice.


at prices


Even

that


are generally not publicized nor


reported.


In addition,


prices


advertised branded


products


were


available.


At the retail


level,


prices


reported


frozen


products


by the Market


Research Corporation


America


USDA prices


for fresh


fruit


are


generally


felt


to be accurate.


It must be


margin can


emphasized


be measured and


that
that


only relative changes


little


can be


in the marketing


said about wholesale or


retail
outlet,
margins


profit


levels.


it is possible


on certain


In addition,


that


products


because of


a retailer may


in order


have


to generate


nature


very


low or


of a retail


negative


traffic through his


store


and sell


products with higher unit profits.


extent


to which


citrus


citrt.s


products


are


used


as "loss


leaders"


is not known.


The
value of


FOB-retail


fresh


fruit


margin accounts


(Table


Less


over
than


60 percent of the
40 percent of the


retail


retail


price


paid


fresh Florida


grapefruit


is paid


for growing,


picking


hauling

the FOB
single-
value (


packing


-retail


strength


Tabi


margins


grapefruit


17 and


selling fresh


frozen


grapefruit.


concentrated


juice average


No trend


in the


27 and


orang


On the other
e juice and


26 percent of


FOB-retail


margin


hand,
canned


retail
is indicated.


It is difficult


products


a sma ller


to explain


percentage of


the FOB-retail


retail


oric


margin
e than


for processed


the margin


. L


- - a











Table


16. --FOB


packinghouse


Florida


grape


fruit,


retail
1964-65


prices
through


for white,


1976-77


seedless,


seasons


Retail


Season


Florida


value


r equivalent
1-3/5 bu.


FOB-retail


price


packinghouse


margin


Percent


Actual


.of retail


value


-3/5


- $


bushel


equivalent


- Percent


6.45


10.57

10.00


1964-65

1965-66

1966-67

1967-68

1968-69

1969-70

1970-71


1971


10.85

11.03

11.48

11.22

12.54

13.47

13.97

15.02

14.48

15.76


1972-73

1973-74

1974-75

1975-76

1976-77


6.82


9.40

9.22


10.08


Source:


[21].


asix-month weighted


packed


in two 4/5-bushel


and Pittsburgh.


Returns


average
cartons,


(Nov


-Apr


average


to retailer


white


for Atlanta,


saleable


seedless


Boston,


fruit


size


Chicago


(3 percent


allowance


loss


incurred


during marketing processes).


price


bWeighted all
reported by


area price


Florida


calculated


from Interior


Indian


River


Citrus Mutual


_~ I _
__ 'IIII II I


I I I II I __


_ ___ ~









Table 17.--FOB shipping point and retail prices for 12 6-ounce cans of
frozen concentrated orange juice, 1964-65 through 1976-77
seasons


FOB FOB-retail margin
FOB
Retail shipping
Season price a point Percent
Spice point
price Actual of retail
value

$ per 12 6-oz. cans Percent

1964-65 2.32 1.62 .70 30
1965-66 2.20 1.62 .58 26
1966-67 1.75 1.19 .56 32
1967-68 2.15 1.62 .53 25
1968-69 2.44 1.78 .66 27
1969-70 2.17 1.46 .71 33
1970-71 2.22 1.60 .62 28
1971-72 2.46 1.88 .58 24
1972-73 2.39 1.74 .65 27
1973-74 2.44 1.82 .62 25
1974-75 2.60 2.01 .59 23
1975-76 2.67 2.03 .64 24
1976-77 3.20 2.38 .82 26



Weighted monthly average price for the season December through
November calculated from retail data reported by the Market Research
Corporation of America [13].

Processor's card prices of non-advertised brands as reported by
Florida Citrus Mutual [6].









Table 18.--FOB shipping point and retail prices for 12 46-ounce cans of
single-strength grapefruit juice, 1964-65 through 1976-77
seasons


FOB FOB-retail margin
FOB
SRetail shipping
price Perpointent
n price tb Actual of retail
price
value

-$ per case - Percent

1964-65 4.43 3.16 1.27 29

1965-66 4.67 3.29 1.3Q 30

lh66-67 4.03 2.69 1.34 33

1967-68 4.71 3.51 1.20 25

1968-69 4.50 3.07 1.43 32

1969-70 5.42 4.06 1.36 25

1970-71 5.74 4.40 1.34 23

1971-72 5.81 4.48 1.33 23

1972-73 5.60 4.12 1.48 26

1973-74 5.59 4.19 1.40 25

1974-75 5.91 4.34 1.57 27

1975-76 5.90 4.39 1.51 26

1976-77 6.52 5.25 1.27 19



As reported by Market Research Corporation of America [13].

As shown on processor's price cards.









sales revenues per unit of floor space, added packaging that may be
added to fresh fruit and the weight of fresh fruit relative to its
value. Perishability may also be an important factor although fresh
citrus wholesale and retail spoilage have been estimated at very low
levels [24].


COSTS OF MARKETING CHANNEL FUNCTIONS


While previous sections have been concerned with individual stages
in the marketing channel, the purpose of this section is to look simul-
taneously at the total marketing channel and determine how much of the
consumer's dollar spent on citrus and citrus products is returned to
various marketing channel participants. Three products, orange concen-
trate, canned single-strength grapefruit juice and fresh grapefruit are
examined.
The amount and percentage of the retail dollar that is returned at
various levels in the marketing channel was calculated for frozen concen-
trated orange juice (Table 19). Many of the items have been relatively
stable (the larger the coefficient of variation, the greater the amount
of variation). Picking and hauling costs have shown the greatest
variability due to the strong increasing time trend and are followed
closely by on-tree returns (Table 19). FOB-retail margins and processing
cost have shown the least amount of variation.
For the 13 years shown, on-tree returns are 30.6 percent of the
average price paid for orange concentrate in 6-ounce cans. The FOB-retail
and processing costs have averaged 27 and 28 percent, respectively.
While picking and hauling costs have been the element accounting for the
lowest percentage of the retail dollar, this item has shown the strongest
upward trend.
For canned grapefruit juice the relative proportion of the retail
dollar for processing costs is much higher than for concentrate (41
compared to 28). Picking and hauling costs represent a lower percentage
of the retail dollar (12 percent) while grower returns are 21 percent







Table 19.--Proportion of the consumer's food dollar spent on 6-ounce cans of frozen concentrated


orange juice that
1976-77 seasons


is returned to various marketing channel participants, 1964-65 through


Re l v e FOB-retail Processing Picking &
Retail value On-tree value
Sean margin costs hauling costs
Season
Cost Share Cost Share Cost Share Cost Share Cost Share

$/doz. Percent $/doz. Percent $/doz. Percent $/doz. Percent $/doz. Percent

1964-65 2.32 100 .70 30 .54 23 .19 8 .89 39
1965-66 2.20 100 .58 26 .59 27 .26 12 .77 35
1966-67 1.75 100 .56 32 .52 30 .24 14 .43 24
1967-68 2.15 100 .53 25 .56 26 .28 13 .78 36
1968-69 2.44 100 .66 27 .56 23 .35 14 .87 36

1969-70 2.17 100 .71 33 .60 28 .34 16 .52 24
1970-71 2.22 100 .62 28 .61 28 .36 16 .63 28
1971-72 2.46 100 .58 24 .60 24 .37 15 .91 37
1972-73 2.39 100 .65 27 .67 28 .41 17 .66 28
1973-74 2.44 100 .62 25 .76 31 .46 19 .60 25

1974-75 2.60 100 .59 23 .85 33 .43 16 .73 28
1975-76 2.67 100 .64 24 .81 30 .44 17 .78 29
1976-77 3.20 100 .82 26 .87 27 .58 18 .93 29


Standard
Deviation --- 3.09 3.04 2.89 5.27

Mean --- 26.9 27.5 15.0 30.6

Coefficient
of Variation --- .115 .111 .192 .172









and show the most variation (.314). The FOB-retail margin is approxi-
mately 27 percent of the retail dollar and shows slightly more variation
than processing costs (Table 20).
The most striking contrast between relative margins for marketing
channel participants is the extremely high FOB-retail margin on fresh
grapefruit accounting for 61 percent of the retail food dollar for the
past 13 seasons (Table 21). For every dollar a consumer has spent on
fresh grapefruit the past 13 seasons, 60 cents pays for services after
it leaves Florida packinghouses. Growers receive 20 cents and picking,
hauling, packing and selling expenses account for another 20 cents.
On-tree returns display the greatest variability with pick and haul
exhibiting similar instability.


SUMMARY


Grower's returns from citrus products vary considerably by product
and type of fruit. Also, growers have in general received a lower
percentage of the consumers' dollar spent on fresh fruit than on pro-
cessed products even though returns for fresh fruit have generally been
higher than returns from processed products.
Costs of picking, hauling, packing and processing citrus products
have increased and are taking more of the industry's revenue. Materials
costs for all citrus products have been a major recent cost increase
factor. It seems quite clear that the industry should examine alternative
ways of packaging so that the materials cost increases can be controlled.
For fresh fruit, the FOB-retail margin should be the target of
considerable research. An 8 percent reduction in the FOB-retail margin
would be as significant as eliminating all picking and hauling costs.
Comparison of the coefficients of variation from Tables 19, 20, and
22 reveals that, in general, on-tree returns and pick and haul costs are
more variable than any of the components of the citrus marketing bill.





Table 20.--Proportion of the consumer's food dollar spent on 46-ounce cans of single-strength grape-
fruit juices that is returned to various marketing channel participants, 1964-65 through
1976-77 seasons


Retail value FOB-retail Processing Picking &
Season margin costs hauling costs
SeasonCost Share Cost Share Cost Share Cost Share Cost Share
Cost Share Cost Share Cost Share Cost Share Cost Share


/icase Percent $/case Percent


100
100
100
100
100

100
100
100
100
100

100
100
100


1.27
1.38
1.34
1.20
1.43

1.36
1.34
1.33
1.48
1.40

1.57
1.51
1.27


$/case Percent


1.62
1.70
1.68
1.88
1.86

1.98
2.06
2.06
2.16
2.39

2.87
2.82
2.92


$/case Percent


.42
.49
.46
.53
.55

.58
.59
.60
.68
.78

.78
.78
.96


$/case Percent


1.12
1.10
.55
1.10
.66

1.50
1.75
1.82
1.28
1.02

.69
.79
1.37


.103

L.. 75


b.* y 4


Coefficient
of
Variation .140


.075


3.84


.459


26.5 2.15



.145 .213


1964-65
1965-66
1966-67
1967-68
1968-69

1969-70
1970-71
1971-72
1972-73
1973-74

1974-75
1975-76
1976-77


4.43
4.67
4.03
4.71
4.50

5.42
5.74
5.81
5.60
5.59

5.91
5.90
6.52


StaIndard
Deviation .741


4.52


40.7


1.76


11.6


.111


6.7

21.31



.314


.152


---





Table 21.--Proportion of the consumer's retail food dollar spent on fresh grapefruit that is returned
to various marketing channel participants, 1964-65 through 1976-77 seasons



Retail value FOB-retail Packing cost Picking & On-tree value
Season margin hauling costs

Cost Share Cost Share Cost Share Cost Share Cost Share

$/box Percent $/box Percent $/box Percent $/box Percent $/box Percent

1964-65 10.57 100 6.45 61 1.37 13 .45 4 2.30 22
1965-66 10.00 100 5.69 57 1.41 14 .50 5 2.40 24
1966-67 9.33 100 5.94 64 1.41 15 .48 5 1.50 16
1967-68 10.85 100 5.82 54 1.56 14 .55 5 2.92 27
1968-69 11.02 100 7.21 65 1.57 14 .55 5 1.70 15

1969-70 11.48 100 6.82 60 1.66 14 .60 5 2.40 21
1970-71 11.22 100 6.68 60 1.71 15 .62 5 2.21 20
1971-72 12.54 100 7.27 58 1.72 14 .66 5 2.89 23
1972-73 13.47 100 7.98 59 1.77 13 .74 6 2.98 22
1973-74 13.97 100 8.81 63 2.06 15 .85 6 2.25 16

1974-75 15.02 100 9.40 63 2.21 15 .68 4 2.73 18
1975-76 14.48 100 9.22 64 2.27 15 .69 5 2.30 16
1976-77 15.76 100 10.08 64 2.55 16 .74 5 2.39 15


Standard
Deviation --- 3.3 .870 .577 3.91

Mean -- 60.9 14.4 5 19.6

Coefficient
of Variation --- .054 .060 .115 .199










REFERENCES


[I] Fairchild, Gary F. A Determination of Returns Associated with
the Production of Florida Citrus. CIR 74-2. Economic
Research Department, Florida Department of Citrus.
Gainesville. April 1974.

[21 Fairchild, Gary F. and L. H. Myers. Estimated Florida Orange,
Temple and Grapefruit Production 1976-77 through 1981-82.
CIR 77-1. Economic Research Department, Florida Department
of Citrus. Gainesville. 1977.

f31 Florida Agricultural Statistics. Citrus Summary. Florida Crop
and Livestock Reporting Service. Orlando, Florida. Various
years.

[4] Florida Agricultural Statistics. Commercial Citrus Inventory,
1977. Florida Crop and Livestock Reporting Service. Orlando,
Florida.

[5] Florida Canner's Association. Statistical Summary, 1976-77 Season.
Winter Haven, Florida.

[6] Florida Citrus Mutual. Annual Statistical Report, 1976-77.
Lakeland, Florida.

[7] Florida Division of Fruit and Vegetable Inspection. Annual Report.
Seasons 1968-69 thru 1976-77.

[8] Growers Administrative Committee. Statistical Record 1976-77
Florida Citrus Season. Lakeland, Florida. 1977.

[9] Hooks, R. Clegg and Richard L. Kilmer. Estimated Costs of Packing
and Selling Fresh Florida Citrus, 1976-77 Season. Economic
Information Report 93. Food and Resource Economics Department.
University of Florida. Gainesville. June 1978.

[10] Hooks, R. Clegg and Richard L. Kilmer. Estimated Costs of Processing,
Warehousing and Selling Florida Citrus Products, 1976-77 Season.
Economic Information Report 96. Food and Resource Economics
Department. University of Florida. Gainesville. July 1978.

[11] Hooks, R. Clegg, A. H. Spurlock and Richard L. Kilmer. Estimated
Costs of Picking and Hauling Florida Citrus Fruits, 1973-74
Season. Economic Information Report 94. Food and Resource
Economics Department. University of Florida. Gainesville.
June 1978.









[12] Kilmer, Richard L. and Daniel S. Tilley.
Approach to Industry Cost Analysis.
and Resource Economics Department.
Gainesville. April 1978.


A Variance Component
Staff Paper 82. Food
University of Florida.


[13] Market Research Corporation of America. Unpublished reports on
citrus product sales and prices purchased by Florida Depart-
ment of Citrus. Various monthly reports through 1978.

[14] Spurlock, A. H. and H. G. Hamilton. Changes in Production Areas
and Trends in Citrus Harvesting, Packing and Processing Costs.
Agricultural Economics Report 12. Food and Resource Economics
Department. University of Florida. Gainesville. 1970.

[15] Spurlock, A. H. Costs of Packing and Selling Florida Fresh Citrus
Fruits. 1950-51 to 1971-72 Seasons. Food and Resource
Economics Department. University of Florida. Gainesville.


[16] Spurlock, A. H.
1950-51 to
Department.


Cost of Picking and Hauling Florida Citrus Fruits.
1971-72 Seasons. Food and Resource Economics
University of Florida. Gainesville.


[17] Spurlock, A. H. Costs of Processing, Warehousing and Selling
Florida Citrus Products. 1950-51 to 1971-72 Seasons. Food
and Resource Economics Department. University of Florida.
Gainesville.


[18] Tilley, Daniel S. Estimated Costs of
Florida Citrus, 1973-74 Season.
30. Food and Resource Economics
Florida. Gainesville. 1975.


Packing and Selling Fresh
Economic Information Report
Department. University of


[19] Tilley, Daniel S. Estimated Costs of Picking and Hauling Florida
Citrus Fruits, 1973-74 Season. Economic Information Report
27. Food and Resource Economics Department. University of
Florida. Gainesville. 1975.

[20] Tilley, Daniel S. Estimated Costs of Processing Warehousing and
Selling Florida Citrus Products, 1973-74 Season. Economic
Information Report 32. Food and Resource Economics Department.
University of Florida. Gainesville. 1975.

[21] U.S.D.A. Fruit Situation. Various issues.

[22] Walker, Thomas S. "Economic Analysis of the Domestic and Foreign
Hired Agricultural Labor Market in Florida". Unpublished M. S.
thesis. University of Florida. 1975.


I





36



[23] Ward, Ronald and James A. Niles. "Concentration in the Citrus
Processing Industry". Citrus and Vegetable Magazine.
Vol. 28, No. 2, pp. 22-24. October 1974.

[24] Wright, W. R. and B. A. Billeter. Marketing Losses of Selected
Fruits and Vegetables. Marketing Research Report No. 1017.
Agricultural Research Service. United States Department of
Agriculture. January 1975.




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